Core ideas:
The results in the first three quarters increased by 7.21% compared with the same period last year, and the cash flow improved significantly. The company released three quarterly reports, the first three quarters achieved revenue of 2.536 billion yuan (year-on-year-1.73%), home net run 272 million yuan (year-on-year + 7.21%), in line with expectations. In the third quarter, the revenue was 930 million yuan (year-on-year + 3.92%), the return net profit was 113 million yuan (year-on-year + 15.85%), and the non-return net profit was 101 million yuan (year-on-year + 5.04%, mainly Q3 confirmed 12.28 million subsidy). Benefiting from the company's enhanced payback, the company achieved a net operating cash flow of 569 million yuan (+ 56.15% compared with the same period last year).
The company continues to control the size of its liabilities, with the asset-liability ratio falling from 79 per cent of 2020H1 to 71.2 per cent.
The operation in the hand water plant is accelerated, and the operating income continues to increase. By the end of the report, the company's sewage treatment scale reached 5.46 million tons per day, and the net operation in the first half of the year exceeded 500,000 tons per day, and the operation of the waterworks accelerated.
In terms of orders, as of the report, the company added 895 million yuan in engineering contracts, down 51.4% from the same period last year; 234 million new operational orders, down 51.1% from the same period last year, and no new PPP orders. The company's operational orders have been completed and put into operation at an accelerated pace, contributing 800 million in operating income in the first half of the year.
Energy conservation will hold the company and help the company to participate in the protection of the Yangtze River. Guozhen Group, a major shareholder of the company, plans to transfer shares to energy conservation. After the transfer, the proportion of shares held by energy conservation will reach 22.73%, and the proportion of voting rights will reach 28.73%. The company actively promotes energy-saving mixed reform and business cooperation, and strives to form a cooperative reserve project bank. At present, energy conservation plays an important role in the protection of the Yangtze River, and has participated in the construction of pilot cities for the company to achieve business support, follow-up and improve the financing environment.
The purchase of shares by state-owned enterprises is accompanied by abundant orders on hand, maintaining the "buy" rating. Without considering the convertible debt-to-equity swap, the company's EPS from 2020 to 2022 is expected to be 0.54,0.65 and 0.78 yuan per share, corresponding to PE times according to the latest closing price. The company introduced a number of high-quality countries for 17.7, 14.6, 12.2 respectively to optimize the shareholder structure of central enterprises, and is expected to usher in an improved financing environment, financial pressure gradually alleviated, which can accelerate the landing of the project. Give a valuation of 21 times PE in 2020, corresponding to the reasonable value of 11.25 yuan per share, and maintain the "buy" rating.
Risk hint. Energy saving failed to control the company; the execution of the company's order was lower than expected.